Record oil production lifts New Mexico state income, risks

SANTA FE, N.M. (AP) - Government income continues to surge in a state with the highest rate of poverty in the western U.S. amid record-setting oil and natural gas production in New Mexico.

Economists from three state agencies and the Legislature said Wednesday that state general fund income for the coming fiscal year that begins on July 1, 2020, is expected to surpass current annual spending obligations by $907 million. That represents a nearly 13 percent surplus over current spending levels.

Most of the fiscal windfall is linked to steadily growing oil and natural gas production focused in the Permian Basin that straddles the state line between New Mexico and Texas.

The fiscal forecast holds major implications for public school budgets, tax incentives to the film industry and an array of state government services.

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House Republican Leader, James Townsend, shared the following statement:

"This money should be used to invest in the economic future of New Mexico. It should not be used to bloat the size of government or throw good money after bad on failed policies and programs. As it stands, the state’s fortunes are tied to the oil and gas industry. While revenues are strong now, we all know that could change. Using this money to permanently expand the size of state government will only set up future state leaders for failure.

Therefore, these new monies should be applied toward tangible investments that will propel our state’s economy forward. Projects like new interstate interchanges and other road improvements, rural broadband expansion, and meaningful gross receipts tax reform deserve priority. Now’s the time to be innovative. If we spend this money on the same old stale “big government” policies we’ve chased for years, we will have wasted this opportunity.”

The governor's office shared the following statement with KOB 4:

"The governor is certainly optimistic about the consistently positive revenue projections and excited by the potential, should the numbers hold, for increased investments in the areas that are priorities for hard-working New Mexicans, like child well-being, early childhood education as well as K-12 public education generally, initiatives combating child hunger and poverty, efforts to diversify our state economy and local businesses and boost workers, and programs to boost our collective public safety, including investing in long-overdue infrastructure projects that were neglected by previous state leadership."